XXXXXXX FUND, INC.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Date: September 7, 1998
Xxxxxxx Investor Services, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Underwriting Agreement
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Dear Ladies and Gentlemen:
Xxxxxxx Fund, Inc. (hereinafter called the "Fund") is a corporation
organized under the laws of Maryland and is engaged in the business of an
investment company. The authorized capital of the Fund consists of shares of
common stock, par value $0.001 per share ("Shares"), currently divided into
three active series (each a "series") each of which is currently divided into
two or more sub-classes (as described in the registration statement referred to
below). Shares may be divided into additional series or classes of the Fund. The
Fund has selected you to act as principal underwriter (as such term is defined
in Section 2(a)(29) of the Investment Company Act of 1940, as amended (the "1940
Act")) of the Shares and you are willing to act as such principal underwriter
and to perform the duties and functions of underwriter in the manner and on the
terms and conditions hereinafter set forth. Accordingly, the Fund hereby agrees
with you as follows:
1. Delivery of Documents. The Fund has furnished you with copies
properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Fund, dated September 2,
1982, as amended or supplemented to date.
(b) By-Laws of the Fund as in effect on the date hereof.
(c) Resolutions of the Board of Directors of the Fund selecting
you as principal underwriter for each series and approving
this form of Agreement.
The Fund will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
The Fund will furnish you promptly with properly certified or
authenticated copies of any registration statement filed by it with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
(the "1933 Act") or the 1940 Act, together with any financial statements and
exhibits included therein, and all amendments or supplements thereto hereafter
filed.
2. Registration and Sale of Additional Shares. The Fund will from time
to time use its best efforts to register under the 1933 Act such number of
Shares not already so registered as you may reasonably be expected to sell on
behalf of the Fund. You and the Fund will cooperate in taking such action as may
be necessary from time to time to qualify Shares so registered for sale by you
or the Fund in any states mutually agreeable to you and the Fund, and to
maintain such qualification. This Agreement relates to the issue and sale of
Shares that are duly authorized and registered and available for sale by the
Fund, including redeemed or repurchased Shares if and to the extent that they
may be legally sold and if, but only if, the Fund sees fit to sell them.
3. Sale of Shares. Subject to the provisions of paragraphs 5 and 7
hereof and to such minimum purchase requirements as may from time to time be
currently indicated in the Fund's prospectus or statement of additional
information, you are authorized to sell
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as agent on behalf of the Fund Shares authorized for issue and registered under
the 1933 Act. You may also purchase as principal Shares for resale to the
public. Such sales will be made by you on behalf of the Fund by accepting
unconditional orders to purchase Shares placed with you by investors and such
purchases will be made by you only after acceptance by you of such orders. The
sales price to the public of Shares shall be the public offering price as
defined in paragraph 6 hereof. The Fund acknowledges that SIS may appoint
financial service firms ("Firms")as its agents to provide distribution services
hereunder to investors. The Firms shall provide such office space and equipment,
telephone facilities, personnel, advertising and promotion as is necessary or
beneficial for providing information and distribution services to existing and
potential clients of the Firms. Such Firms shall at all times be deemed to be
retained by SIS and not the Fund. SIS will require each Firm to conform to the
provisions hereof and the Registration Statement at the time in effect with
respect to the net asset value of the Fund's shares.
4. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from investors unconditional
orders for Shares authorized for issue by the Fund and registered under the 1933
Act, provided that you may in your discretion refuse to accept orders for Shares
from any particular applicant.
5. Sale of Shares by the Fund. Unless you are otherwise notified by the
Fund, any right granted to you to accept orders for Shares or to make sales on
behalf of the Fund or to purchase Shares for resale will not apply to (i) Shares
issued in connection with the merger or consolidation of any other investment
company with the Fund or its acquisition, by purchase or otherwise, of all or
substantially all of the assets of any investment company or substantially all
the outstanding shares of any such company, and
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(ii) to Shares that may be offered by the Fund to shareholders of the Fund by
virtue of their being such shareholders.
6. Public Offering Price. All Shares sold to investors by you will be
sold at the public offering price. The public offering price for all accepted
subscriptions will be the net asset value per Share, determined, in the manner
provided in the Fund's registration statements for the applicable series as from
time to time in effect under the 1933 Act and the 1940 Act, next after the order
is accepted by you.
7. Suspension of Sales. If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further orders
for Shares shall be accepted by you except unconditional orders placed with you
before you had knowledge of the suspension. In addition, the Fund reserves the
right to suspend sales and your authority to accept orders for Shares on behalf
of the Fund if, in the judgment of a majority of the Board of Directors or a
majority of the Executive Committee of such Board, if such body exists, it is in
the best interests of the Fund to do so, such suspension to continue for such
period as may be determined by such majority; and in that event, no Shares will
be sold by you on behalf of the Fund while such suspension remains in effect
except for Shares necessary to cover unconditional orders accepted by you before
you had knowledge of the suspension.
8. Portfolio Securities. Portfolio securities of each series of the
Fund may be bought or sold by or through you and you may participate directly or
indirectly in brokerage commissions or "spread" in respect to transactions in
portfolio securities of any series of the Fund; provided, however, that all sums
of money received by you as a result of such purchases and sales or as a result
of such participation must, after reimbursement
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of your actual expenses in connection with such activity, be paid over by you to
or for the benefit of the Fund.
9. Expenses. (a) The Fund will pay (or will enter into arrangements
providing that others than you will pay) all fees and expenses:
(1) in connection with the preparation, setting in type and filing
of any registration statement (including a prospectus and
statement of additional information) under the 1933 Act or the
1940 Act, or both, and any amendments or supplements thereto
that may be made from time to time;
(2) in connection with the registration and qualification of
Shares for sale in the various jurisdictions in which the Fund
shall determine it advisable to qualify such Shares for sale
(including registering the Fund as a broker or dealer or any
officer of the Fund or other person as agent or salesman of
the Fund in any such jurisdictions);
(3) of preparing, setting in type, printing and mailing any
notice, proxy statement, report, prospectus or other
communication to shareholders of the Fund in their capacity as
such;
(4) of preparing, setting in type, printing and mailing
prospectuses annually, and any supplements thereto, to
existing shareholders;
(5) in connection with the issue and transfer of Shares resulting
from the acceptance by you of orders to purchase Shares placed
with you by investors, including the expenses of printing and
mailing confirmations of such purchase orders and the expenses
of printing and mailing a prospectus included with the
confirmation of such orders;
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(6) of any issue taxes or any initial transfer taxes;
(7) of WATS (or equivalent) telephone lines other than the portion
allocated to you in this paragraph 9;
(8) of wiring funds in payment of Share purchases or in
satisfaction of redemption or repurchase requests, unless such
expenses are paid for by the investor or shareholder who
initiates the transaction;
(9) of the cost of printing and postage of business reply
envelopes sent to Fund shareholders;
(10) of one or more CRT terminals connected with the computer
facilities of the transfer agent other than the portion
allocated to you in this paragraph 9;
(11) permitted to be paid or assumed by the Fund pursuant to a plan
("12b-1 Plan"), if any, adopted by the Fund in conformity with
the requirements of Rule 12b-1 under the 1940 Act ("Rule
12b-1") or any successor rule, notwithstanding any other
provision to the contrary herein;
(12) of the expense of setting in type, printing and postage of the
periodic newsletter to shareholders other than the portion
allocated to you in this paragraph 9; and
(13) of the salaries and overhead of persons employed by you as
shareholder representatives other than the portion allocated
to you in this paragraph 9.
b) You shall pay or arrange for the payment of all fees and expenses:
(1) of printing and distributing any prospectuses or reports
prepared for your use in connection with the offering of
Shares to the public;
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(2) of preparing, setting in type, printing and mailing any other
literature used by you in connection with the offering of
Shares to the public;
(3) of advertising in connection with the offering of Shares to
the public;
(4) incurred in connection with your registration as a broker or
dealer or the registration or qualification of your officers,
directors, agents or representatives under Federal and state
laws;
(5) of that portion of WATS (or equivalent) telephone lines,
allocated to you on the basis of use by investors (but not
shareholders) who request information or prospectuses;
(6) of that portion of the expenses of setting in type, printing
and postage of the periodic newsletter to shareholders
attributable to promotional material included in such
newsletter at your request concerning investment companies
other than the Fund or concerning the Fund to the extent you
are required to assume the expense thereof pursuant to
paragraph 9(b)(8), except such material which is limited to
information, such as listings of other investment companies
and their investment objectives, given in connection with the
exchange privilege as from time to time described in the
Fund's prospectus;
(7) of that portion of the salaries and overhead of persons
employed by you as shareholder representatives attributable to
the time spent by such persons in responding to requests from
investors, but not shareholders, for information about the
Fund;
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(8) of any activity which is primarily intended to result in the
sale of Shares, unless a 12b-1 Plan shall be in effect which
provides that the Fund shall bear some or all of such
expenses, in which case the Fund shall bear such expenses in
accordance with such Plan; and
(9) of that portion of one or more CRT terminals connected with
the computer facilities of the transfer agent attributable to
your use of such terminal(s) to gain access to such of the
transfer agent's records as also serve as your records.
Expenses which are to be allocated between you and the Fund shall be
allocated pursuant to reasonable procedures or formulae mutually agreed upon
from time to time, which procedures or formulae shall to the extent practicable
reflect studies of relevant empirical data.
10. Conformity with Law. You agree that in selling Shares you will duly
conform in all respects with the laws of the United States and any state in
which Shares may be offered for sale by you pursuant to this Agreement and to
the rules and regulations of the National Association of Securities Dealers,
Inc., of which you are a member.
11. Independent Contractor. You shall be an independent contractor and
neither you nor any of your officers or employees is or shall be an employee of
the Fund in the performance of your duties hereunder. You shall be responsible
for your own conduct and the employment, control and conduct of your agents and
employees and for injury to such agents or employees or to others through your
agents or employees. You
8
assume full responsibility for your agents and employees under applicable
statutes and agree to pay all employee taxes thereunder.
12. Indemnification. You agree to indemnify and hold harmless the Fund
and each of its directors and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act, against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which the Fund or such directors, officers, or controlling person
may become subject under such Act, under any other statute, at common law or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by you or any of your employees,
representatives or agents, or (ii) may be based upon any untrue statement or
alleged untrue statement of a material fact contained in a registration
statement (including a prospectus or statement of additional information)
covering Shares or any amendment thereof or supplement thereto or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement therein not misleading if such
statement or omission was made in reliance upon information furnished to the
Fund by you, or (iii) may be incurred or arise by reason of your acting as the
Fund's agent instead of purchasing and reselling Shares as principal in
distributing the Shares to the public, provided, however, that in no case (i) is
your indemnity in favor of a director or officer or any other person deemed to
protect such director or officer or other person against any liability to which
any such person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of his duties or by reason of his
reckless disregard of obligations and duties under this Agreement or (ii) are
you to be liable under your indemnity agreement contained in this
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paragraph with respect to any claim made against the Fund or any person
indemnified unless the Fund or such person, as the case may be, shall have
notified you in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claims shall have
been served upon the Fund or upon such person (or after the Fund or such person
shall have received notice of such service on any designated agent), but failure
to notify you of any such claim shall not relieve you from any liability which
you may have to the Fund or any person against whom such action is brought
otherwise than on account of your indemnity agreement contained in this
paragraph. You shall be entitled to participate, at your own expense, in the
defense, or, if you so elect, to assume the defense of any suit brought to
enforce any such liability, but if you elect to assume the defense, such defense
shall be conducted by counsel chosen by you and satisfactory to the Fund, to its
officers and directors, or to any controlling person or persons, defendant or
defendants in the suit. In the event that you elect to assume the defense of any
such suit and retain such counsel, the Fund, such officers and directors or
controlling person or persons, defendant or defendants in the suit shall bear
the fees and expenses of any additional counsel retained by them, but, in case
you do not elect to assume the defense of any such suit, you will reimburse the
Fund, such officers and directors or controlling person or persons, defendant or
defendants in such suit for the reasonable fees and expenses of any counsel
retained by them. You agree promptly to notify the Fund of the commencement of
any litigation or proceedings against it in connection with the issue and sale
of any Shares.
The Fund agrees to indemnify and hold harmless you and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15
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of the 1933 Act, against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses) to which you or such directors,
officers or controlling person may become subject under such Act, under any
other statute, at common law or otherwise, arising out of the acquisition of any
Shares by any person which (i) may be based upon any wrongful act by the Fund or
any of its employees or representatives, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement (including a prospectus or statement of additional
information) covering Shares or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such statement or omission was made in reliance upon information furnished to
you by the Fund; provided, however, that in no case (i) is the Fund's indemnity
in favor of a director or officer or any other person deemed to protect such
director or officer or other person against any liability to which any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of his duties or by reason of his
reckless disregard of obligations and duties under this Agreement or (ii) is the
Fund to be liable under its indemnity agreement contained in this paragraph with
respect to any claims made against you or any such director, officer or
controlling person unless you or such director, officer or controlling person,
as the case may be, shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon you or upon such director,
officer or controlling person (or after you or such director, officer or
controlling person shall have received notice of such
11
service on any designated agent), but failure to notify the Fund of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Fund will be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but if the Fund elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to you, your directors, officers, or controlling person or persons,
defendant or defendants in the suit. In the event that the Fund elects to assume
the defense of any such suit and retain such counsel, you, your directors,
officers or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by them,
but, in case the Fund does not elect to assume the defense of any such suit, it
will reimburse you or such directors, officers or controlling person or persons,
defendant or defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of any Shares.
13. Authorized Representations. The Fund is not authorized to give any
information or to make any representations on behalf of you other than the
information and representations contained in a registration statement (including
a prospectus or statement of additional information) covering Shares, as such
registration statement and prospectus may be amended or supplemented from time
to time.
You are not authorized to give any information or to make any
representations on behalf of the Fund or in connection with the sale of Shares
other than the information and
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representations contained in a registration statement (including a prospectus or
statement of additional information) covering Shares, as such registration
statement may be amended or supplemented from time to time. No person other than
you is authorized to act as principal underwriter (as such term is defined in
the 0000 Xxx) for the Fund.
14. Duration and Termination of this Agreement. This Agreement shall
become effective upon the date first written above and will remain in effect
until September 30, 1999 and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually by the vote of a
majority of the directors who are not interested persons of you or of the Fund,
cast in person at a meeting called for the purpose of voting on such approval,
and by vote of the Board of Directors or of a majority of the outstanding voting
securities of the Fund. This Agreement may, on 60 days' written notice, be
terminated at any time without the payment of any penalty, by the Board of
Directors of the Fund, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement will automatically terminate
in the event of its assignment. In interpreting the provisions of this paragraph
14, the definitions contained in Section 2(a) of the 1940 Act (particularly the
definitions of "interested person", "assignment" and "majority of the
outstanding voting securities"), as modified by any applicable order of the
Securities and Exchange Commission, shall be applied.
15. Amendment of this Agreement. No provisions of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. If the Fund should at any time deem it
necessary or advisable in
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the best interests of the Fund that any amendment of this Agreement be made in
order to comply with the recommendations or requirements of the Securities and
Exchange Commission or other governmental authority or to obtain any advantage
under state or federal tax laws and should notify you of the form of such
amendment, and the reasons therefor, and if you should decline to assent to such
amendment, the Fund may terminate this Agreement forthwith. If you should at any
time request that a change be made in the Fund's Articles of Incorporation or
By-laws or in its methods of doing business, in order to comply with any
requirements of federal law or regulations of the Securities and Exchange
Commission or of a national securities association of which you are or may be a
member relating to the sale of shares of the Fund, and the Fund should not make
such necessary change within a reasonable time, you may terminate this Agreement
forthwith.
16. Termination of Prior Agreements. This Agreement upon its
effectiveness terminates and supersedes all prior underwriting contracts between
the parties.
17. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract.
Very truly yours,
XXXXXXX FUND, INC.
By: _____________________________
Xxxxxx X. XxXxxxxxx,Vice President
The foregoing agreement is hereby accepted as of the foregoing date
thereof.
XXXXXXX INVESTOR SERVICES, INC.
By:________________________________
Xxxxxx Xxxxxx, President
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